ValueCommerce Co.,Ltd. FY2026 Q2 Earnings Report

Quick View

Executive Summary

In Q2, the Company recorded Revenue of ¥57.97B, an Operating Loss of ¥5.60B, and a Net Loss of ¥4.60B, resulting in earnings marked by worsening profitability and a heavy burden from company-wide expenses. The Operating Margin was -9.7%, and Ordinary Income was -¥5.48B. While the core MarketingSolution Business secured Operating Income of ¥5.42B (10.4% margin), company-wide expenses of ¥9.73B and a TravelTech loss of ¥1.28B exceeded this amount, resulting in a company-wide loss. Progress against the full-year plan stood at only 40.3% for Revenue, while 80.0% of the planned Operating Loss had already been incurred, making improvement of the cost structure in the second half a key focus.

Factors Affecting Earnings

【Revenue】Revenue was ¥57.97B, with segment composition of ¥52.10B for MarketingSolution (89.8% composition ratio) and ¥5.92B for TravelTech (10.2%), indicating a high concentration in MarketingSolution. Progress against the full-year plan of ¥144.0B was 40.3%, below the standard half-year progress level (50%).

【Profit and Loss】Operating results were an Operating Loss of ¥5.60B, as SG&A expenses of ¥25.64B exceeded Gross Profit of ¥20.03B (Gross Margin: 34.6%). Combined segment Operating Income was ¥4.14B (MarketingSolution ¥5.42B − TravelTech ¥1.28B), but company-wide expenses (intersegment adjustment amount) of ¥9.73B significantly weighed on this result and were the primary cause of the consolidated Operating Loss. Non-operating income and expenses were nearly neutral (net +¥0.11B), resulting in an Ordinary Loss of ¥5.48B. A gain on the sale of fixed assets of ¥0.88B (a temporary factor) was recorded as extraordinary income, and because the burden of income taxes and other taxes was nearly zero, the Net Loss narrowed to ¥4.60B. The full-year plan also anticipates a 39.5% decrease in Revenue from the previous fiscal year, and together with the Operating Loss recorded for the current period, the Company can be characterized as being in a phase of declining revenue and earnings.

Segment Analysis

MarketingSolution secured profitability with Revenue of ¥52.10B and Operating Income of ¥5.42B (10.4% margin), accounting for 89.8% of company-wide Revenue and serving as the earnings pillar. In contrast, TravelTech continues to operate at a loss, with Revenue of ¥5.92B and an Operating Loss of ¥1.28B (margin of -21.6%); although small in scale, it presents a profitability challenge. Combined segment Operating Income was positive at ¥4.14B, but after deducting ¥9.73B in company-wide expenses not attributable to either segment, consolidated Operating Loss was ¥5.60B. Accordingly, the primary cause of the company-wide loss is not segment profit and loss but the heavy burden of company-wide expenses.

Key Financial Indicators

【Profitability】The Operating Margin was -9.7%, Ordinary Income Margin was -9.5%, Net Profit Margin was -7.9%, and ROE was -4.1%, placing all indicators in a loss phase for the current period. Although the Gross Margin itself was maintained at a certain level of 34.6%, the SG&A Ratio of 44.2% exceeded it, with weak cost absorption capacity at the operating level being the primary cause of worsening profitability.【Cash Flow Quality】Operating Cash Flow (OCF) was positive at ¥1.95B; however, compared with the Net Loss of ¥4.60B, OCF/Net Income was only -0.42x and OCF/(Operating Income + Depreciation) was only -0.36x, indicating limited linkage between earnings and cash generation. Trade receivables were ¥19.38B, down 11.8% year on year, and turnover days were approximately 61 days, indicating that working capital worked in an easing direction during the current period.【Investment Efficiency】Capital expenditures of ¥6.0B exceeded Depreciation of ¥0.2B, indicating that the scale of investment is leading, while investment securities increased 45.7% year on year to ¥11.03B.【Financial Soundness】The Equity Ratio was 73.7% (down from 75.5% in the previous year), the Current Ratio was 347%, and the D/E Ratio was 0.36x, with all remaining at conservative levels. BPS was ¥522.49, down 7.0% from ¥561.96 in the previous year, suggesting the effects of the current-period loss and the composition of treasury stock.

Cash Flow Analysis

Operating Cash Flow was positive at ¥1.95B, but the gap with the Net Loss of ¥4.60B was substantial. Depreciation of ¥0.2B and a ¥2.6B decrease in trade receivables provided support, while a ¥0.6B decrease in trade payables was a negative factor. Investing Cash Flow was -¥6.91B, primarily due to capital expenditures of ¥6.0B. It also included investment in intangible assets of ¥0.3B and the acquisition of investment securities of ¥1.6B, partially offset by proceeds from the sale of fixed assets of ¥0.9B. Financing Cash Flow was -¥5.17B, most of which resulted from dividend payments for the previous fiscal year (FY ended December 2025). Free Cash Flow (Operating Cash Flow + Investing Cash Flow) was negative at -¥4.96B, meaning that dividends paid during the current period were funded with cash retained internally. As a result, cash and deposits decreased by ¥10.13B from ¥110.26B at the end of the previous fiscal year to ¥100.13B at the end of the current period; however, the cash ratio of total assets remained substantial at 65.0%.

Quality of Earnings

Recurring earning power depends on Operating Income from the MarketingSolution Business, while TravelTech remains a structurally loss-making segment. Extraordinary income of ¥0.88B (gain on the sale of fixed assets) was a temporary factor and contributed to reducing the current-period Net Loss to ¥4.60B. The nearly zero burden of income taxes and other taxes was also a factor in narrowing the Net Loss relative to the Ordinary Loss of ¥5.48B. Valuation differences on other securities increased by ¥1.31B from ¥3.00B at the end of the previous fiscal year to ¥4.31B at the end of the current period. Accordingly, comprehensive income for the current period is likely to be at a level reflecting this valuation gain in addition to the Net Loss of ¥4.60B, suggesting a certain divergence between Net Income and comprehensive income. Although OCF exceeded Net Income, the fact that OCF/Net Income remained at -0.42x is an element requiring attention when evaluating the quality of current-period earnings.

Earnings Forecast and Guidance

Progress against the full-year plan was 57.97B/144.0B, or 40.3%, for Revenue; -¥5.60B/-¥7.00B, or 80.0% consumed, for Operating Results; -¥5.48B/-¥7.00B, or 78.3% consumed, for Ordinary Results; and -¥4.60B/-¥8.00B, or 57.5% consumed, for Net Results. While Revenue progress was below the standard half-year ratio (50%), losses had already reached approximately 80% of the plan during the first half, highlighting an imbalance in progress.

In the second half, in addition to Revenue growth, reductions in company-wide expenses and improvement in the Gross Margin will be prerequisites for achieving the full-year plan (Operating Loss of ¥7.0B and Net Loss of ¥8.0B). The dividend forecast (¥8) had not been revised as of the current quarter and remains unchanged.

Shareholder Returns

The dividend of ¥5.17B actually paid during the current period corresponds to the dividend of ¥25 per share for the previous fiscal year (FY ended December 2025). The interim dividend forecast for the current fiscal year (FY ending December 2026) remains unchanged at ¥8 per share, and the full-year dividend forecast also remains unchanged at ¥8 per share. Because the Company recorded a Net Loss during the current period, the Payout Ratio cannot be calculated mathematically, making it difficult to assess sustainability on an earnings basis. Free Cash Flow of -¥4.96B was below the dividend payment of ¥5.17B, indicating that shareholder returns during the current period were funded not by cash generated from operating activities but by cash on hand (ending balance of ¥100.13B). The Company has adopted a stable dividend policy based on comprehensive consideration of financial soundness and Free Cash Flow; improvement in Operating Results and recovery in FCF will be important factors for the continuation of dividends going forward. No share buyback has been disclosed.

Risk Factors

1. Business Concentration Risk: The MarketingSolution Business accounts for 89.8% of Revenue, creating a structure in which fluctuations in advertising market conditions and changes in regulations or tracking technologies have a significant impact on company-wide performance.

2. Declining Cash Conversion Efficiency: OCF/Net Income was only -0.42x, OCF/(Operating Income + Depreciation) was only -0.36x, and Free Cash Flow was negative at -¥4.96B, indicating that investment and shareholder returns continue to be funded through the drawdown of internal cash.

3. Valuation Fluctuation Risk of Investment Securities: The balance of investment securities increased 45.7% year on year to ¥11.03B, while valuation differences on other securities expanded by ¥1.31B, increasing sensitivity to the impact of market fluctuations on net assets and comprehensive income.

Industry Benchmark (For Reference; Compiled by the Company)

Industry Benchmark (it_telecom)

Profitability and Returns

Both the Operating Margin and Net Profit Margin were significantly below the industry median, placing the Company in the lower tier of the industry in terms of profitability.

※Source: Compiled by the Company

Key Takeaways from the Financial Results

1. The primary cause of the company-wide loss is not segment profit and loss but company-wide expenses (adjustment amount of ¥9.73B). A key structural point is that the profitability of MarketingSolution (¥5.42B) alone is insufficient to absorb these expenses.

2. Progress against the full-year plan is asymmetric, with Revenue at 40.3% while 80.0% of the planned Operating Loss has already been consumed. The extent to which expense control and Gross Margin improvement can be achieved in the second half will determine whether the plan is met.

3. Cash and deposits account for 65.0% of total assets, providing financial capacity to absorb negative Free Cash Flow and dividend payments with internal cash. However, increased investment securities have raised sensitivity to valuation fluctuations.

Theoretical Share Price (Reference Value)

This is a reference range mechanically calculated solely from publicly disclosed data using a residual income model (Ohlson-type model with an explicit 5-year fade). It is not a forecast of the market share price or a recommendation of any specific investment action.

Sensitivity: ¥300–¥317 at Cost of Equity ±1%, and ¥303–¥313 at ω±0.1.

Notes:

• As forecast ROE is below the Cost of Equity, the theoretical value is below Book Value Per Share.
• Net assets as of the quarter-end are used (there is a timing gap versus the full-year forecast).

(Calculation model: Residual Income Model / Interest Rate Reference Month: 2026-06 / This value does not forecast or guarantee the future share price)

---

This report is an earnings analysis document automatically generated by AI based on XBRL earnings release data. It does not recommend investment in any specific security. The industry benchmarks are reference information compiled by the Company based on publicly disclosed earnings data. Investment decisions should be made at your own responsibility, after consulting a professional as necessary.

---End of Report---